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The fight to find a good FD

In the first of a two-part series on the difficulties firms and big businesses face when trying to fill top finance jobs, Lucinda Kemeny asks whether Barclays' recruitment woes only scratch the surface of a UK-wide problem.

In today’s world, the ability to compete for business on a global scale is everything and having visionary senior management is vital to achieve that aim. Beancounters are out, mental acrobats are in.

Size brings its own problems, however, and ones that are becoming more apparent as the world shrinks. Mental acrobats, after all, are a little thin on the ground.

Take Barclays for example. Last week saw the shock resignation of chief executive Michael O’Neill on the day he was due to take up the reins.

Luckily for the financial services group, his mere appointment was enough to convince the City that the company was committed to redressing its structural problems. Even on the day he resigned, its share price closed up over 40 pence.

Internally, the problem of finding a replacement has only just begun.

And it needs to be sorted out quickly if the bank is to counteract signals that competitors like the Royal Bank of Scotland are already amassing their forces in order to mount hostile merger bids.

Institutional shareholders have already spoken out against the bank recruiting internally because of the perceived need to bring in ‘new blood’. The issue, which has yet to be dealt with, is exactly who in the country is fit to fill O’Neill’s shoes. In choosing O’Neill, Barclays has already been forced to look across the Atlantic once.

This is apart from the problem of replacing finance director Oliver Stocken, who has had to put off his plans to retire until after the bank’s agm on 23 April. Only three weeks ago, Barclays was still refusing to name a successor, despite the fact that time was running short. Some speculated that this could have been because O’Neill wanted to influence the choice, or was planning to bring someone with him.

But perhaps the reason was more fundamental. It is possible that Barclays could not find anyone to take the job, either because those asked were unwilling or that there was simply no-one acceptable.

Kidsons Impey’s search-and-selection managing director, Terry Fuller, recognises an industry-wide problem. ‘When corporate structures double in size, they more than halve the number of people that have the ability to run them,’ he says.

Fuller argues it is not the case that capable individuals are not available, but just that some companies require levels of intellectual ability that are hard to find.

‘That is why bigger UK corporates have to go to the US to recruit; because they have bigger organisations and so are more able to find people who can handle the large corporate jobs over here,’ he adds.

Reed Accountancy Personnel operations director David Callaghan agrees that there is a serious skills shortage among senior ranks – particularly at the finance director level – because organisations now look to their FD to take on the role of business leader, driving the company forward, as opposed to the historical, stereotyped accountant.

The problem is being exacerbated by the growing lure of the City for the best newly qualified accountants, who would naturally fill FD posts after promotion.

Even the accountancy institutes responsible for training these bright young things recognise that an accountant with good interpersonal skills need no longer be constrained by the limits of the profession – and its comparatively paltry salaries – as the City is beginning to afford accountancy the kind of respect it gave to legal training in the 1980s.

Now good accountants with two or three years’ experience are as likely to shun the firms or industry as embrace them. Instead, they can simply approach one of the big City recruitment companies and put themselves forward for corporate finance jobs. ‘The very brightest can double their salaries overnight,’ says one English institute official.

The shortage of accountants able to fill a finance director’s shoes is not a problem that is going to go away. Good FDs are in demand to fill chief executive roles. But bad ones are still too common. Statistics from the Institute of Directors show that around 50% of directors appointed to company boards are failing in their roles due to lack of training. These failures – not just of finance directors, but all director posts – leave big holes in the management structures of companies when they leave.

This is nothing new. It bears out the long-standing management theory that business people are only promoted to the level at which they fail.

That is why issues of succession – note Marks & Spencer’s well-publicised spat over who would take over from chief executive Sir Richard Greenbury earlier this year – also need to be sorted out.

‘Companies are increasingly fishing in a smaller pond,’ says IoD head of board and director development Richard Joyce gloomily. ‘It is very serious, creating power vacuums which are expensive and time consuming to fill.’

For all its familiarity, the persistent problems of recruiting and retaining good-quality senior business people is no less depressing. Ask Barclays.